Aaj English TV

Friday, July 12, 2024  
05 Muharram 1446  

The real reason solar panel prices are declining

The industry failed to consider how thin is too thin

The prices of solar panels have fallen sharply in recent weeks owing to a rising demand across Pakistan. However, the trend in prices has been seen worldwide which could leave ripples across the solar electricity market across the globe.

The manufacturing of photovoltaic cells, more commonly known as solar panels, has traditionally been dominted by China who, like other industries, reached massive production as well as economies of scale to supply vast amounts across the globe.

However, to break this monopoly, western countries came up with a simple solution – just make bigger cells.

These cells, known as gigawatt or GW cells, were ambitious but soon hit snags. Production plans first hit delays and were then scrapped throughout.

The fight for monopoly led to China reportedly hoarding two months of production instead of releasing into the markets. Faced with such uncertain production lines, western manufacturers also started stocking up inventories which were procured at higher prices.

However, the problem affecting the solar panel market is not just about the business practices, but about the construction of the panels themselves.

As companies sought for a larger share of the market, they tried to find ways to make their prices as low as possible. A big part of lowering costs was using thinner glass and thinner frames in the cells.

The industry had traditionally relied on 3.2mm fully-tempered glass for panels. However, to cut costs and make the panels larger without making them hefty, the inudstry started shifting to 2mm glass around 2017.

However, while costs were reduced, the industry failed to consider how thin is too thin. The cells with 2mm glass that cost low started reporting higher breakage rates.

The higher breakage rates are leading to warranty claims and contract disputes, and as the matter travels up the chain it causes lower customer confidence as well as slow downs and uncertainty in the manufacturers themselves.

As prices of panels go down due to uncertainties, the solar panel industry is contemplating if higher costs are worth the additional layer of quality that it brings.

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